Bonuses are extra money given by employers to staff members in lieu of salaries for exceptional work or for any other reason determined by the payroll policy of the business. In certain organizations, incentives are given to all workers on holidays like Diwali. Bonus payments boost employee morale and encourage them to accomplish their goals, which boosts corporate productivity. Businesses give bonuses to employees to recognize their accomplishments or to express their appreciation.

Depending on whether it satisfies specific requirements, a bonus payment may be discretionary or nondiscretionary. Bonuses that are awarded to employees at random and that they do not anticipate are known as discretionary bonuses. An employee may receive this kind of bonus if they perform exceptionally well. Conversely, nondiscretionary bonuses are those that are awarded to staff members in accordance with their commitments.

Bonus minimum and maximum

The Payment of Bonus Act (1965) states that an employee may get a bonus of up to 20% of their income, with a minimum bonus of 8.33%.